Markets rattled as Trump kicks trade war with China into high gear

Global stocks dropped on Wednesday after the US released a list of $ 200 billion worth of Chinese exports that could be subject to new ten percent tariffs.

The Shanghai Composite in China fell 1.8 percent and Hong Kong’s Hang Seng was down 1.3 percent. China’s currency, the yuan, slid about 0.5 percent against the dollar.

Other markets also suffered, with Japan’s Nikkei closing down 1.2 percent. Major European indexes dropped more than one percent, with shares in London off the most. The FTSE 100 was down by 112 points, or 1.4 percent, while Germany’s DAX was off 1.31 percent and France’s CAC 40 lower by 1.15 percent. The STOXX 600, which tracks the biggest companies in Europe, was down one percent.

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“Stock markets in Europe are firmly in the red as President Trump outlined plans to impose a fresh round of tariffs on China. The US president has lined up tariffs on $ 200 billion worth of Chinese goods as a way of showing Beijing he means business,” David Madden, market analyst at CMC Markets UK, was cited as saying by the Guardian.

“There will be a two-month review process, and a hearing in late August. The threat of another round of tariffs has rattled investors, just as market confidence was picking up,” he added.

Washington’s announcement on Wednesday comes just days after the United States and China introduced tariffs of 25 percent on $ 34 billion of each other’s exports. China’s Commerce Ministry said Wednesday that the Trump administration’s announcement of new measures was totally “unacceptable,” promising a mirror response to defend its national interests.

Investors are now bracing for retaliation from Beijing in the form of more tariffs and “other creative methods” for showing its displeasure, said Jingyi Pan, a Singapore-based market strategist at broker IG Group.

That could include making life difficult for US companies operating in the world’s second biggest economy, he told CNN Money. A Singapore-based currency strategist at Scotiabank, Gao Qi, said the absence of any planned trade negotiations to defuse tensions between the two governments was adding to investors’ anxieties.

He explained that the Trump administration’s plan to impose tariffs on another $ 16 billion of Chinese goods this summer could further pressure the yuan.